Prime Minister Narendra Modi announced on November 8, 2016 that Rs. 500 and Rs. 1000 banknotes would no longer be considered legal tender. The objective was to combat black money, corruption, terrorism, and counterfeiting. However, the sudden nature of the announcement and lack of preparation negatively impacted many ordinary citizens. While demonetization has been attempted before with little success, the size and timing of this move was unprecedented. If more time was given, it may not have been as effective at reducing unaccounted cash. Though an imperfect solution, demonetization will help curb some black money hoarded as cash, estimated to be around 23% of India's GDP. Other countries have taken similar actions to deal with

1. Life after demonetisation
The word demonetisation means currency unit declared as an invalid legal tender it is done
when there is change in national currency of nation. On the evening of 8th
November 2016,
Prime Minister Narendra Modi announced on his speech in national television that the
currency of Rs. 500 and Rs. 1000 were lose their validity stating that while Rs. 500 will be
re-issue, Rs. 1000 will completely lose their validity and advanced technologically note Rs.
500 and Rs. 2000 will be introduced from November 10 and all the notes in lower
demonetisation will continue to be a valid legal tender.
The objective is to combat with the black money, corruption terrorism and menace of
counterfeiting. In his 40 minutes speech PM Modi states that Rs. 500 and Rs. 1000 would
merely a worthless piece of paper, said government is combating from the poverty and
working for the economic benefit of the poor. At the stroke of the hour on evening of 8th
November 2016, India loses its 86% of monetary base. Small farmers, sellers and daily wage
labourer are suffering because of lack of planning, intelligence and foresight such
recalibration of ATM machines. There was need to pile up enough Rs. 100 notes and other
lower demonetisation in the market before taking the step.
In the past Demonetisation is taken place twice but its fails the idea is to tackle the black
money existing in the circulation. Same as if the announcement and time have been given,
this step might not have been successful in controlling the black money. Although it will
inconvenient to the common people initially, given the short span of time to get this currency
notes exchanged or deposited in banks and post office. In his speech Prime Minister Modi
said that date for exchanging the currency is 31st
December 2016, after this date demonetised
currency will not be exchanged or deposited. Considering the fact that only half of the
population of India has bank account (World Bank report) there is a substantial section of the
society that will find it difficult to get currency exchanged.
In India the black money is stored in the various form likes Gold, land and cash. The step of
demonetisation will only curb that black money which is in the form of hard cash. It does not
necessary means that it is an inadequate solution. Relying on the report of the World Bank
year 2010, black money formed about 23.2% of the India’s GDP in 2007. We cannot afford
to wait for a better comprehensive solution.

2. This step has been taken by various countries. In February this year, Europe was considering
abolishing circulation of 500 Euros bills in order to curb tax evasion and terrorism funding. In
the same month US treasury secretary Larry summers recommended that the $100 bill be
demonetised.
It is essential to note here that it is an excellent move from combating the corruption the plan
can by no means be an exclusive step.
TAUSEEF PARVEZ
B.A.LL.B 3rd
Yr
LLOYD LAW COLLEGE